It all seems like it is more than time to move your big, heavy and confusing accounting books to the basement. As soon as a few regular clients and purveyors are doing business with even the smallest companies, these companies tend to switch from pen-and-paper bookkeeping to computerised accounting. And even when they don’t, they rely on an accountant who uses business accounting software.
New software programs, and even new types of distribution and commercial packages keep coming to the market, all of them proposing simpler, cheaper, more comprehensive operations. Marketing efforts would lead any prospective buyer to believe that even those who know nothing about accounting can use these business accounting software products effortlessly.
But not every software product is right for the specific needs of a given company.
In what format, what packaging does accounting software come in these days and what do they do? What are the key criteria for choosing an accounting software product? What’s the price of these software products, and more essentially, how much does it cost to use them? All the answers in our guide.
Business accounting software basics
Business accounting software can take many forms, and the features now can go much further than simply doing the math. The key to understanding which package is right for a company is to think about the accounting program as a part of the whole business software environment within the organisation.
Types of business accounting software
A first attempt at classifying business accounting software is based on the distribution type:
- some software products are running on local machines and require a proper installation,
- others operate completely in the cloud and can be ran directly from a browser, only requiring an internet connection.
What the software product actually does allows a second categorisation:
- some programs not actually made for accounting can be used for bookkeeping purposes, with limited success - like MS Excel,
- some programs are designed as more or less advanced proper accounting products, like Sage One,
- some other packages can be of interest, just because one program in the package deals with accounting - these are full business management software suites from Oracle or Microsoft.
Which features should be included - and which ones just may be
Included features vary according to the position of the business accounting software in this second categorisation:
- proper accounting software programs include inventory management, sales reporting, invoicing, tax reporting, bank account connection and estimates, with sometimes payroll features and CRM features,
- business management software include full ERP, CRM, merchant account connection, procurement, billing etc.
Choosing the right software for your needs
Before even thinking about pricing, choosing the right business accounting software option involves choosing between horizontal or vertical software, and selecting the right package for the company size.
Horizontal scope VS vertical software
The most widely distributed and easily available business accounting software products deal with the general needs of the mass B2B market, and can do all generic bookkeeping tasks. These are called horizontal software.
So-called “vertical software” products add industry-specific customisations and features to cater for the specific accounting needs of precise business sectors.
How size and scale matter
One of the most important questions related to any kind of software product these days is: can it scale? Can the software support the volume of your needs, right now, and as it grows, in one year, two years, ten years time?
Questions related to the size of the company and the features of the software to cope with this size therefore have to be understood dynamically.
This is even more the case with cloud-based business accounting software, as pricing models are usually based on the number of users and/or the volume of data or transactions included in the package.
Calculating the total cost of usage
Experimented business executives know that price of anything a company buys is never really the core of the matter: the more interesting, and far-reaching question is to know how much what the company buys will cost, in the short and long term.
This is also true with business accounting software.
Business accounting software prices
The rise of cloud-based accounting software has considerably changed the market, with many new players competing, and with new commercial packages redefining the question of the price.
While more traditional options, with established players such as Microsoft and Oracle, still cost thousands of pounds per year, many new vendors provide cheaper small business accounting software products.
Usually, cloud-based software fall within four price categories:
- free software,
- entry-level options of reputable vendors at around £10 a month;
- standard packages at around £20 per month;
- all-inclusive packages worth £30-£50 per month.
Additional costs of usage
Since the model has largely switched from an ownership model to a usage-based model, with fewer and fewer clients actually purchasing the software product for good, preferring to pay a monthly subscription, the real question is now related to the total cost of usage.
Cloud-based software products make it simpler by usually including, or even suppressing the following costs:
- installation costs,
- maintenance costs,
- upgrade costs,
- server costs,
- support costs.
However, these additional costs are still relevant for any accounting software option:
- training costs,
- customisation costs,
- marginal costs related to additional users or capacities.
Prospective buyers should remember that switching to a new accounting software program, however user-friendly they pretend it to be, always take some time getting used to, even after some training. This all goes to say that it may take weeks before users can become fully productive with their new package - not to mention those users who will use a business accounting software program for the first time!